Chapter 17 Designing and Managing Value Networks and Marketing Channels by. Kotler on Marketing. Establish channels for different target markets and aim for efficiency, control, and adaptability. Chapter Objectives.
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Establish channels for different target markets and aim for efficiency, control, and adaptability.
How a Distributor Reduces theNumber of Channel Transactions
B. Number of contacts
with a distributor
M x C = 3 + 3 = 6
Consumer Marketing Channels
sales branchIndustrial Marketing Channels
Level of sales (dollars)
Break-Even Cost Chart
Channel Management Decisions
Common Ownership at Different
Levels of the Channel
Types of Vertical Marketing Systems
Leadership is Assumed by One or
a Few Dominant Members
Contractual Agreement Among
Conventional Distribution Channel vs. Vertical Marketing Systems
Successful “go-to-market” strategies require integrating retailers, wholesalers, and logistical organizations.
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Retail Positioning Map
Classification Of Retailer Types Channels
Narrow Product Line, Deep Assortment
Wide Variety of Product Lines i.e. Clothing, Home Furnishings, & Household Items
Wide Variety of Food, Laundry, & Household Products
Limited Line of High-Turnover Convenience Goods
Broad Product Line, Low Margin, High Volume
Inexpensive, Overruns, Irregulars, and Leftover Goods
Large Assortment of Routinely Purchased Food & Nonfood Products, Plus Services
Broad Selection, Fast Turnover, Discount Prices
Store Type Length and Breadth of Product Assortment
Direct Selling Channels
Types of NonStore Retailing
NonStore Retailing Accounts for More Than 12% of All Consumer Purchases, and is trending up.
Wheel of Retailing Channels
Why are Wholesalers Used?
Services & Advice
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Higher Distribution Costs/ Higher Customer Service Levels
Lower Distribution Costs/ Lower Customer Service Levels
Goals of the Logistics System
Transportation Least Cost. Water, Truck, Rail, Pipeline & AirLogistics Systems
Minimize Costs of
When to order
How much to order
Rail Least Cost.
Nation’s largest carrier, cost-effective
for shipping bulk products, piggyback
Flexible in routing & time schedules, efficient
for short-hauls of high value goods
Low cost for shipping bulky, low-value
goods, slowest form
Ship petroleum, natural gas, and chemicals
from sources to markets
High cost, ideal when speed is needed or to
ship high-value, low-bulk itemsTransportation Modes
1. Speed. Least Cost.
Checklist for Choosing